Soho China Falls as It Denies Money Laundering: Hong Kong Mover

By Bloomberg News -
Feb 5, 2013

Soho China Ltd., the biggest
developer in Beijing’s central business district, dropped by the
most in more than a year in Hong Kong stock trading after a
Beijing Times report linked the company to money laundering.
Soho denied the claim.

Soho shares fell 6.6 percent to HK$6.42 at the midday
break, the biggest drop since Dec. 19, 2011. The stock had the
largest decline on the MSCI China Index as 30-day volatility
jumped to 31.5, the highest level since Sept. 7, data compiled
by Bloomberg show.

The Beijing Times reported a woman who may have been
involved in money laundering and owned 41 properties bought most
of them from Soho. The report cited comments posted to a
microblog on Sina Corp.’s Twitter-like Weibo service.

“We emphasize again that any accusations about us
colluding in money laundering or kickbacks is rumor,” Soho
Chief Executive Officer Zhang Xin said yesterday in a statement
on her microblog and confirmed by the company.

China on Feb. 4 detained a woman, who owned 41 properties,
on suspicion of forging official documents and seals, according
to Xinhua News Agency. The revelations come amid a crackdown on
corruption initiated after Xi Jinping became the ruling
Communist Party’s General Secretary in November.

“Fund managers are usually sensitive to any sort of
scandals just to be cautious,” said Johnson Hu, a Hong Kong-
based property analyst at CIMB-GK Securities Research. “It
shouldn’t impact greatly on the company in the long run because
Soho changed strategy last year from property sales to
rentals.”

Soho, which traditionally sold most of its projects, would
hold on to more of its properties, Zhang said in a Bloomberg
Television interview in August.

“We always support cracking down on corruption,” Zhang
wrote on the microblog yesterday. “We have no way to know where
our clients’ money comes from, but we will cooperate as long as
the government investigates.”